Dividend tax treatment · 2026
O Realty Income Corporation
O pays ordinary (non-qualified) dividends — taxed at your full federal income tax rate.
What O's tax treatment means in dollars
At the current 5.15% yield on $10,000 invested, O generates approximately $515.00 in annual dividends.
| Scenario | Tax owed | After-tax income |
|---|---|---|
| Qualified rate (15% — most investors) | $113.30 | $401.70 |
| Ordinary income rate (22% bracket) | $113.30 | $401.70 |
After-tax income by federal bracket — $10,000 invested
The table shows your estimated after-tax dividend income at each federal bracket, under both qualified and ordinary treatment. O's actual treatment is highlighted.
| Federal bracket | Qualified after-tax | Ordinary after-tax | Tax savings (qualified) |
|---|---|---|---|
| 10% | $515.00 | $463.50 | +$51.50 |
| 12% | $515.00 | $453.20 | +$61.80 |
| 22% | $437.75 | $401.70 | +$36.05 |
| 24% | $437.75 | $391.40 | +$46.35 |
| 32% | $437.75 | $350.20 | +$87.55 |
| 37% | $412.00 | $324.45 | +$87.55 |
LTCG/qualified rate: 0% for 10–12% brackets, 15% for 22–35%, 20% for 37%. State taxes not included. Illustrative only — verify with a tax advisor.
Where to hold O for best tax efficiency
Ordinary income dividends are taxed at your marginal rate every year in a taxable account — sheltering them in a Roth or tax-deferred account eliminates the annual tax drag.
General guidance only — your optimal placement depends on your full tax situation, available account types, and other holdings. Consult a tax advisor for personalized advice.
Frequently asked questions
Is O's dividend qualified or ordinary?
O pays ordinary (non-qualified) dividends.
What is O's after-tax dividend income?
At a 5.15% yield on $10,000 invested, O generates approximately $515.00/year in gross dividends. After tax: $437.75 at the 15% qualified rate, or $401.70 at a 22% ordinary rate.
Should I hold O in a Roth, IRA, or taxable account?
Ordinary income dividends are taxed at your marginal rate every year in a taxable account — sheltering them in a Roth or tax-deferred account eliminates the annual tax drag.
What is the difference between qualified and ordinary dividends?
Qualified dividends are taxed at the long-term capital gains rate (0%, 15%, or 20% depending on your income), which is significantly lower than ordinary income rates (10%–37%). To qualify, dividends must be paid by a US corporation or qualified foreign corporation, and you must hold the stock for more than 60 days around the ex-dividend date. Ordinary (non-qualified) dividends — common for REITs, covered-call ETFs, and bond funds — are taxed as regular income at your marginal rate.
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